Private Health Insurance Companies' Share Prices Rising: Where Should You Invest

The private health insurance companies in India are growing at a fast pace compared to the government entities, and their share prices are rising. The market share of private players in this sector remained stable at 49.6%. This trend has remained since the pandemic sharply. According to a report by Motilal Oswal, "Private players reported a Gross Written Premium (GWP) of Rs. 87.8b, implying 15% YoY growth in Feb'22 and 11.0% YoY growth in FY22YTD, much above the overall industry performance." The standalone health insurance companies (SAHIs) outperformance is continuing with a 30% growth; while the PSU multi-line players are lagging with a 2% decline. Reports mention that the private multi-line players have grown by 15% on a YoY basis.

Best performing companies

Major private players have reported considerable growth in their financial reports which has led to an increase in their share prices. ILOM has reported growth of 8.9% YoY (+3.7% YoY in FY22YTD), Bajaj Allianz reported growth of 5.5% YoY (+8.4% YoY in FY22YTD), while Star Health has reported the best growth rate of 23.5% YoY (26.3% YoY in FY22YTD). Reputed brokerage firm Motilal Oswal has recommended buying the stock of Star Health for a 23% upside in 1 year.

The above-mentioned report said, "Among the key players, ICICI Lombard/Star Health reported a strong GWP growth of 9%/24% YoY, respectively. Conversely, Bajaj Allianz/New India reported a growth of 6%/1%, respectively." The report added, "The overall industry GWP for the month came in at Rs. 166b (up 5.2% YoY). Growth was driven by the strong performance of 22.2%/7.7% YoY from the Health and Fire segments, whereas the Motor segment saw muted growth of 5% YoY. The crop segment declined 37% YoY. In FY22YTD, Star Health has seen the highest market share gains of 60bp at 4.9%. Among the private players, ILOM's market share stood at 8.3% (-59bp YoY) in Feb'22."

Insurance from health and motor business growth

The Health business in India has grown by 22% on a YoY basis, with the Retail / Group Health business increasing by 17%/38% YoY, respectively. The health premiums from the government schemes have declined 24% YoY to Rs. 2.4b in Feb '22. The overseas health segment has seen a robust growth of 96% on a YoY basis.

On the other hand, the motor business has grown by 5% on a YoY basis, which is driven by both Motor OD and TP segments. Growth in this segment has remained subdued at 3.6% YoY in FY22YTD. Hence, reducing its share in the overall industry to 31.7% (-227bp), and the slowdown can be attributed to weak vehicle sales in the recent period.